Apple Defeats $1 Billion iPod Antitrust Suit Within Three Hours

Changes to the player's iTunes software were genuine improvements, jurors in Oakland, California said today, rather than attempts to prevent the use of music sold by rival companies

Apple quickly dispensed with a $1 billion suit by iPod users who claimed updates for the music player were meant to block competing downloads, as a jury ruled for the company after only three hours of deliberations.

Jurors heard testimony by experts who said the Apple software upgrades discouraged customers from switching to rival players, and made consumers less “price sensitive” to iPods. Apple could charge more for the devices as a result, they said.

Apple argued that the updates, which enhanced security and guarded against hacking, were in the works two years before competitor RealNetworks Inc. (RNWK) started selling digital music. Claims that Apple “blew up” the iPods of customers who bought music from RealNetworks, to force them to purchase another iPod, were concocted by consumer lawyers who don't understand iTunes technology, Apple lawyers said.

The opposition failed to show that a single iPod user was cheated out of their downloaded music or suffered any harm as a result of the software changes, Apple attorney Bill Isaacson told the jury.

“We created iPod and iTunes to give our customers the world’s best way to listen to music,” Cupertino, California-based Apple said after today’s verdict. “Every time we’ve updated those products -- and every Apple product over the years -- we’ve done it to make the user experience even better.”

U.S. District Judge Yvonne Gonzalez Rogers, who presided over the trial, ruled today that the plaintiffs failed to prove that Apple violated federal antitrust laws. Jurors declined to comment about the verdict.

Patrick Coughlin, one of the consumer attorneys, said it was a challenge to convince jurors that along with product improvements, iTunes 7.0 included code intended to block rivals of the iPod.

“When you include all these things together, you have a very tough case,” Coughlin said after the verdict. “But at least we got to go in front of the jury.”

Coughlin’s law firm represented as many as 8 million iPod customers and 500 resellers in the class-action case. The consumer attorneys told the jury that Jobs and other top company executives who developed and marketed iTunes and the iPod took steps to block software created by a competitor that made songs from its service compatible with the device. The case was over versions of the iPod Classic, iPod Nano and iPod Touch purchased from 2006 to 2009.

The introduction of iTunes 7.0, which blocked downloads by RealNetworks, raised the prices of consumer iPods by 7.45 percent, or $16.32, costing consumers $195 million, plaintiffs’ witnesses said at the trial. Apple overcharged resellers for iPods by 2.38 percent for a total of $149 million, they said. If the jury had awarded damages, they could have been tripled under federal antitrust law.

Apple contended that the iTunes upgrades gave users a more robust and stable product at a time when Apple was competing with illegal downloading schemes, trying to appease music studios that insisted their products be protected from piracy and facing hackers trying to break into iTunes software.


By Karen Gullo